SOUTH KOREA. The much-delayed launch of the duty free tender for Incheon International Airport’s new Terminal 2 is embroiled in what one insider described as “deadlock” today, as Korea Customs Service (KCS) and Incheon International Airport Corporation (IIAC) battle for control over who should assess the bids.
As revealed by The Moodie Davitt Report, KCS insists it should have the final say as to who should be awarded the T2 concessions. It wants to create a licensing committee to evaluate the T2 bids and judge the offers according to a much wider set of criteria than that used by IIAC (60% technical, 40% financial). The committee would work on a similar basis to those that assess rival candidates for downtown duty free shops (see table below).
The KCS intervention has caused a major headache for IIAC, which has been forced to delay the tender. It had been slated initially for November or December last year. Bidding for the five-year contracts was originally due to close by mid-February 2017 with awards expected to be announced by the end of the same month. The tight timeline recognises that the first phase of the ambitious T2 development will open in October, with ultimate project completion in 2023.
Tense discussions in recent days have failed to resolve the impasse, according to reliable sources in the Korean duty free community. Following the latest developments, KCS is suggesting that IIAC puts forward a choice of two candidates for each contract with the KCS to be the final arbiter (according, crucially, to its own criteria). IIAC insists that it must retain the right to choose its own commercial partners, not least because the income they will generate for the airport helps fund critical infrastructure development.
IIAC believes that in order to open T2 retail by October it must launch the tender by the end of this month but no solution currently seems in sight. “The KCS position is very, very strict,” said one senior Korean duty free source, speaking on the grounds of anonymity. “They believe that airport duty free is the same as downtown duty free… and that it should follow the same procedure. The KCS wants to evaluate according to a totally different set of criteria. It is very difficult to see a compromise.”
Historically the IIAC, like most airports around the world, has been the sole evaluator of the respective bids. To The Moodie Davitt Report’s knowledge, there is no precedent for a national customs agency being the ultimate assessor of a duty free tender.
